The term ‘inflation’ is not a new phenomenon, and has engulfed every person on the planet. Inflation simply means the increase in prices, be it commodities, real estate or services, etc. With almost everyone knowing the reasons behind inflation, notwithstanding, many of us are still unable to curb its effect on our financial wellbeing. Certain policies have been executed to take charge over the tentacles of inflation, but many at times, the results are very slow. However, at a personal level, one can undertake measures that ensure a smart combat against inflation. Read 5 key ways that may help in tackling inflation;
Pull the strings of your purse
Now that you’re quiet aware of how inflation spreads its tentacles, the first step to take is by minimising your expenditure. By this it clearly means to buy only what you need. Binge shopping should be brought to an immediate halt because price rise on basic commodities clearly means an exorbitant inflation on all luxury goods and services. This also means that one should have a strict budget to ensure you can save or invest accordingly and do not transcend it. However, when the market is in red, one should stay away from binge shopping.
Step by Step, SIP by SIP
One of the safe ways to protect your money from inflation is by investing in Mutual Funds. Systematic Investment Plan (SIP) is a facility for investing in Mutual Funds. It’s a facility wherein a fixed sum is invested for a continuous period at regular intervals. Now with rising income and increasing inflation rates, your SIP commitment should also increase accordingly. The benefit of SIP is the compounding impact over a longer duration that helps combat inflation by a comfortable margin and has the potential to negate the adverse market trends. The key is to stay invested by making fixed, yet, affordable monthly contributions. After all, that’s how the tortoise won the race; slowly and steadily.
Gold glitters even in the mud
The decreased value of the currency is another implication of inflation and this is exactly why, inflation hedge are considered important. Gold is an age-old, trusted form of an inflation hedge that secures financial interests and helps to tackle inflation. This is because like other commodities, the price of gold tends to shoot up too. The other advantage of considering gold as an investment is that during a bear phase, a portfolio with a fair ratio of gold can not only create a safer portfolio but also helps equalize losses from poorly performing investments.
Not all debts are bad
Investing in stock markets is considered risky by many because of it volatility, especially during inflation. This gives investors an option to invest in safer avenues, and one of them is by investing in Debt Funds that can offer Capital protection. The objective of debt schemes is to safeguard the principal amount. Investors who want the best of both by protecting against downside risk while keep themselves invested in the equity market. Also, an added advantage a few Debts funds offer is the flexibility that allows the investor to enter or exit any day. After all, that’s what swords and shields are for.
Refine your portfolio
It’s a good habit to timely assess your portfolio, however it is imperative for an investor to examine and protect their portfolio when clouds of inflation are hovering above. This is a suggestive measure as this doesn’t just give an insight on the various investments but also gives a fair knowledge of the performance of their portfolio based on the market trends. It also erodes the possibility of devastating your holding. This can be done by taking expert advice that have layers of experience and can guide you rightly.
